How Unilever's $1 billion deal for Dollar Shave Club came together

Unilever is buying the on-demand razor delivery service
Dollar Shave Club in a validation of the startup's novel
approach to selling men's grooming products.

The deal price — reportedly around $1 billion — would be about
five times Dollar Shave Club's expected sales in 2016. Dollar
Shave Club isn't profitable.

That is a punchy premium.

Dollar Shave Club, or DSC, delivers razors to your home each
month with a subscription model, and as
Business Insider's Dennis Green wrote earlier
today, the deal highlights that companies are finally
understanding that men are buying shaving and grooming products
online.

DSC has grown to about 3.2 million customers since it opened
for business in 2012, and has begun to expand its product line
beyond razors into other toiletries. It's also inspired some
imitators, including Harry's and a similar service started by
Gillette (which is owned by Unilever rival Procter &
Gamble).

Unilever is betting that it can take DSC's data and distribution
strategy global.

Here's how the deal went down, according to a person
familiar with the deal:

After DSC's latest funding round in November, the
Dollar Shave Club was meeting with industry executives, although
it wasn't looking for a buyer.

The company's founder, Michael Dubin, had long admired
Unilever, and about six months ago he met with the president of
its North American division, Kees Kruythoff, over dinner
in New York.

They hit it off and began to spend more time together, and the
idea of merging with a global business that's able to help with
advertising and distribution at scale became attractive to Dubin.

Months of back and forth followed, including "unproductive
conversations" around the deal price. Dubin also met with
Unilever's management team and CEO before the two sides could get
to an agreement. The company did not open up the
process to other bidders.

Kruythoff said in a statement on Wednesday that Unilever
plans to "leverage the global strength of Unilever to
support Dollar Shave Club in achieving its full potential in
terms of offering and reach."